For Many, One Surprise During the Past Year's Economic Turmoil ...

... has been the resiliency of the FBO sector. During the past decade, fixed base operations were bought and sold at a frenzied pace, often for prices that were ten to 12 times multiples. With business aviation activity down some 30-40 percent, many in the industry expected that quite a few of these companies would be shutting their doors. That was a common reaction for attendees at last week’s annual NBAA convention in Orlando. Comments one fuel supplier, “A normal person would expect more†[bankruptcies]. Says another, “We have seen a handful that have closed their doors. I expect more consolidation; I would hope that would happen before they just close their doors and walk away.†While many observers expect more FBO bankruptcies in 2010, as well as continued consolidation, there was somewhat of a consensus at NBAA 2009 that the economic bottom was reached this summer, with September bringing an “uptick†(a popular word at this year’s show). Says one supplier, “Planes are flying; we found the floor.†Three separate fuel suppliers all commented that they have been impressed with the level of cost control that their dealers (FBOs) have implemented during the downturn. “Many of them have made some tough choices to reduce costs,†comments one supplier. “Those who have made the tough choices will be in a good position when the turnaround comes.†Ken Allison, president/CEO of Odyssey Aviation, a chain of seven FBOs, says he is optimistic that the turnaround has begun. He also plans to grow his chain through acquisitions, and says he hears of an FBO for sale every two weeks or so. “We’re always looking to grow,†he says, “The days of ten to 12 times multiples are gone; it’s coming back to reality.†Stay tuned. Thanks for reading. jfi